Case Law Details
Prism Cement-Unit II Vs Commissioner of Commercial Tax (Madhya Pradesh High Court)
A bare reading of the expression “Business” u/S.2(d) of M.P. VAT Act, 2002 reveals that tax is leviable inter alia on the event of manufacturer whether or not such event is carried on with motive to make gain or profit and whether or not any gain or profit accrues from such manufacturer.
Words and expression employed in Sec.2(d) of VAT Act are clear that tax is leviable on the activity of manufacturer notwithstanding such activity entailing profit or not. Thus, it is obvious that in the present case, the authorities have factually found that manufacturer had started business on 05.08.2010. Whether appellant chooses to call this process as a trial manufacturer will not make any difference. Importantly, the authorities have also factually found that not only manufacturing but sale of cement had also started from 05.08.2010 which is luminous by reading of the order of Appellate Board especially para 5(4).
The so called trial production of cement and clinker from 05.08.2010 till 01.11.2010 when the appellant claims to have started commercial production has been claimed to be not coming within the definition of “Business” as defined in Sec.2(d) of VAT Act.
In view of above discussion, this Court has no manner of doubt that factual findings rendered by the Appellate Board are in accordance with law and none of the proposed substantial questions of law are made out herein.
In absence of any substantial question of law being made out, this Court declines admission and dismisses this appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADEH HIGH COURT
This appeal is preferred u/S.53 of M.P. VAT Act, 2002 (for brevity “VAT Act”) r/w Sec.13 of M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1776 assailing legality and validity of final order dated 11.12.2017 passed by M.P. Commercial Tax Appellate Board, Bhopal in Appeal No.A/BPL/132/14 vide Anneuxre A-8.
2. The following substantial questions of law are proposed in this appeal:-
“1) Whether a manufacturer can be considered to have commenced business only when its profit making structure capable of commercial production has been put in place and thus the date on which the manufacturer commenced commercial production is taken as the date of commencement of business and not the date on which the trial production was undertaken?
2) Whether the MP Commercial Tax Appellate Board is correct in confirming the levy of Entry Tax against the appellant in respect of the purchases made during the trial production since trial production date cannot be termed as the date of commencement of business?
3) Whether the Commercial Board erred in ignoring the vital fact that for the purpose of exemption certificate under notification no. A-3-25/2010/1/V(96) dated 13.12.2010 the date of commencement of business is 1.11.2010 i.e. the date on which commercial production started?
4) Whether the imposition of interest, in absence of satisfaction of the conditions laid down u/s 18(4) of the MP VAT Act is valid?”
3. Learned counsel for the rival parties are heard on the question of admission.
4. The factual controversy involved herein is as to whether for the material consumed during trial production undertaken by petitioner between 05.08.2010 to 01.11.2010 (the alleged date of commencement of commercial production), the said material is exigible to Entry Tax or not ?
5. The Appellate Board rejecting the appeal of appellant, upheld the order of Appellate Authority dated 21.01.2014 and also the order dated 27.09.2013 of Assessment Officer who found on facts that production of cement had started on 05.08.2010 and not on 01.11.2010 as claimed by appellant.
6. Definition of expression “Business” u/S.2(d) of VAT Act reads thus:-
“Sec.2 : Definitions
(a) XXX XXX
(b) XXX XXX
(c) XXX XXX
(d) Business includes, –
(i) any trade, commerce, manufacture or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern and irrespective of the volume, frequency, continuity or regularity of such trade, commerce, manufacture, adventure or concern; and
(ii) any transaction of sale or purchase of goods in connection with or incidental or ancillary to the trade, commerce,manufacture, adventure or concern referred to in clause (i), that is to say, –
(a) goods whether or not they are in their original form or in the form of second hand goods, unserviceable goods, obsolete or discarded goods, mere scrap or waste material; and
(b) goods which are obtained as waste products or byproducts in the course of manufacture or processing of other goods or mining or generation of or distribution of electrical energy or any other form of power.”
6.1 A bare reading of the aforesaid expression “Business” reveals that tax is leviable inter alia on the event of manufacturer whether or not such event is carried on with motive to make gain or profit and whether or not any gain or profit accrues from such manufacturer.
6.2 Words and expression employed in Sec.2(d) of VAT Act are clear that tax is leviable on the activity of manufacturer notwithstanding such activity entailing profit or not. Thus, it is obvious that in the present case, the authorities have factually found that manufacturer had started business on 05.08.2010. Whether appellant chooses to call this process as a trial manufacturer will not make any difference. Importantly, the authorities have also factually found that not only manufacturing but sale of cement had also started from 05.08.2010 which is luminous by reading of the order of Appellate Board especially para 5(4).
7. Learned counsel for appellant has relied upon Division Bench decision of this Court in the case of Maihar Cement Vs. Assistant Commissioner of Sales Tax, (1985) 60 STC 210, which in the considered opinion of this Court has no application in the present case. In the said case of Maihar Cement (supra), material was brought in for construction of cement plant was made leviable to entry tax. Whereas in the present case, appellant had in fact started production after construction of plant and cement was produced by way of manufacturing. Thus, the case of Maihar Cement (supra) turns on different set of facts.
8. The so called trial production of cement and clinker from 05.08.2010 till 01.11.2010 when the appellant claims to have started commercial production has been claimed to be not coming within the definition of “Business” as defined in Sec.2(d) of VAT Act.
9. In view of above discussion, this Court has no manner of doubt that factual findings rendered by the Appellate Board are in accordance with law and none of the proposed substantial questions of law are made out herein.
10. In absence of any substantial question of law being made out, this Court declines admission and dismisses this appeal.
11. Accordingly, present appeal stands dismissed sans cost.
